Saturday 22 August 2009 10.32 EDT
First published on Saturday 22 August 2009 10.32 EDT

The British government faces fresh embarassment after the Libyan leader, Muammar Gaddafi, met the man convicted of the Lockerbie bombing and heaped praise on Scotland, his "friend Gordon Brown", the Queen and Prince Andrew, saying all of them had contributed to the release of Abdelbaset Ali al-Megrahi.

Gaddafi's comments came during a televised meeting with Megrahi that is bound to intensify the transatlantic row over his release. The White House has described as "outrageous and disgusting" the triumphalist scenes that greeted his arrival in Libya on Thursday.

The Foreign Office has strongly denied claims by Gaddafi's son, Saif, that Megrahi's release was linked to trade deals. Lord Mandelson, the business secretary, said the suggestion was "completely wrong" and "offensive".

Gaddafi defied pressure from the US and Britain by meeting Megrahi, the only man convicted of the bombing of Pan Am flight 103 that killed 270 people when the plane exploded over the Scottish town of Lockerbie in December 1988.

Megrahi has terminal prostate cancer and officially was released by the Scottish goverment on compassionate grounds.

Television footage of the Libya meeting showed the pair embracing and speaking, with the Libyan leader also meeting members of the freed bomber's family.

The Libyan news agency Jana quoted Gaddafi congratulating the Scottish authorities for "their courage and for having proved their independence despite the unacceptable and unreasonable pressures they faced".

He continued: "And I say to my friend Brown, the prime minister of Britain, his government, the Queen of Britain, Elizabeth, and Prince Andrew, who all contributed to encouraging the Scottish government to take this historic and courageous decision, despite the obstacles."

Gadhafi compared Megrahi's return to his government's 2007 release of five Bulgarian nurses and a naturalised Palestinian doctor imprisoned on charges of deliberately infecting with HIV more than 400 Libyan children. The nurses denied the charges and said they were tortured into confessing.

The Libyan leader noted there were no such widespread concerns for the families of the infected children when the nurses returned home to a hero's welcome. "Do we not have feelings and they have feelings?" Gaddafi said.

The growing anger on both sides of the Atlantic at the decision of the Scottish government to free Megrahi has seen the British government attempt to distance itself from the decision.

The Foreign Office put out a statement denying Megrahi's release was linked to trade deals after Gadaffi's son told Libyan television the convicted bomber's case was raised during talks over oil and gas.

"There is no deal," the Foreign Office said. "All decisions relating to the Megrahi case have been made exclusively by Scottish ministers, the Crown Office in Scotland and the Scottish judicial authorities. No deal has been made between the UK government and Libya in relation to Megrahi and any commercial interests in the country."

However, European governments including Britain have been lobbying hard for business in Libya as it emerges from years of sanctions. Oil giants BP and Shell are among several British firms hoping to make big profits in the desert country.

Yesterday Downing Street confirmed that Gordon Brown had written to the Libyan leader, Muammar Gaddafi, calling on Libya to "act with sensitivity" and to ensure a "low-key return" for al-Megrahi. But hours after Britain sent the letter, Megrahi was cheered by hundreds of supporters, some waving Scottish flags, as he landed at Tripoli airport accompanied by Gaddafi's son. Gaddafi's decision to meet the bomber this morning is a further snub to Brown and is likely to draw condemnation form the Foreign Office, which made clear yesterday it would be monitoring Libyan conduct.

Megrahi vowed in an interview with the Times newspaper yesterday that he would present new evidence before he died exonerating him of any involvement in Lockerbie.

He dismissed the international furore over his release, saying US President Barack Obama and others should know he would not be doing anything apart from going to hospital for treatment and waiting to die.

"My message to the British and Scottish communities is that I will put out the evidence (to exonerate me) and ask them to be the jury," Al-Megrahi, sentenced in 2001, said without elaborating.

The White House condemned the scenes at Tripoli airport in unusually undiplomatic language. Robert Gibbs, Barack Obama's spokesman, said: "I think the images that we saw in Libya yesterday were outrageous and disgusting. We continue to express our condolences to the families that lost a loved one as a result of this terrorist murder."

In an interview from his home in Tripoli yesterday, Megrahi denied he or Libya itself were responsible for the Lockerbie bombing. He said that before he died he would present fresh evidence through his Scottish lawyers that would exonerate him. "My message to the British and Scottish communities is that I will put out the evidence and ask them to be the jury," he told the Times, declining to elaborate.

Obama described the scenes at Tripoli airport as "highly objectionable" and the White House warned the Libyan government that it risked a rift between the two countries if there was any repetition of the hero's welcome for Megrahi. Gibbs said the US would be watching what happens next. Washington wants Megrahi held under house arrest. Part of the US anger is because Obama had also asked Libya not to award Megrahi a hero's welcome.

Downing Street was also irritated. Sir Vincent Fean, the British ambassador to Tripoli, delivered Brown's letter to the Libyan prime minister an hour after Megrahi's plane left Glasgow airport.

British government sources said they were "not over the moon" about the celebrations but accepted Libyan explanations that it had not been an official demonstration and that security officials had turned away crowds.

Describing the scenes at the airport as "deeply upsetting", David Miliband, the foreign secretary, said: "I think it's very important that Libya knows – and certainly we have told them – that how the Libyan government handles itself in the next few days after the arrival of Mr Megrahi will be very significant in the way the world views Libya's re-entry into the civilised community of nations."

In a sign that relations have been damaged, British government sources indicated last night that it was highly unlikely the Duke of York, Prince Andrew, would attend ceremonies next month to mark the 40th anniversary of the Libyan revolution that brought Gaddafi to power. No formal invitation has been sent, but the duke, Britain's official trade envoy, had been expected to attend the event as part of the growing trade relationship with Libya.

The Scottish government is planning to defend its decision. Kenny MacAskill, the Scottish justice secretary, who released Megrahi on compassionate grounds because he has terminal prostate cancer, is expected to criticise London's conduct when the Scottish parliament meets in emergency session on Monday.

MacAskill is said to be furious with the British government for refusing to take part in his consultations over the release. SNP sources have said they believe Brown ordered ministers not to take part so that London could distance itself from the decision.

The British government refused to answer in detail a letter from MacAskill after the US authorities told him that London had given an assurance Megrahi would always serve his sentence in Scotland. MacAskill has said London's failure to answer this question was one reason he could not transfer Megrahi to a prison in Libya.